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Creating a New Economics of IT

  • Posted on July 6, 2016

New Economics of IT

If you’ve read the headline and you’re thinking: If we really do need a “new economics of IT,” just tell me what the formula is and I’ll go spin up a project…  you’re probably going to be disappointed. There isn’t a formula (I wish there was) but if you can get over that, then there are a few ideas you may find useful.

The first blog post in this series, discussed how the perfect storm facing IT requires two distinct approaches to respond: a predictable approach to “Optimize the core” and an exploratory approach to “innovate the business.” With these two distinct approaches, IT leaders can repurpose existing resources to create a new perspective on how they approach IT, what Avanade calls the New Economics of IT: In the cloud first digital world, the new economics of IT defines the creation of value through new IT approaches used to maximize efficiency, increase agility and give the freedom to innovate.

What’s Behind the New Economics of IT?

Liquid Applications

Liquid applications are a fundamentally new way to build software.

So for example, you’re a retailer and you want to be able to respond to the expectation of your Digital Customer, but your ERP system is running on dated infrastructure, it doesn’t talk very well (if at all) to your spanking new digital marketing application, oh and by the time new marketing requirements have been met, the market has moved on along with the opportunity.

A liquid application vision, would propose putting the ERP system on the cloud, there’s a few examples of that. Add to that an API (application programming interface) management layer and you’re able to exchange data between your ERP system and your Digital Marketing application, or for that matter the systems your partners are using, even on the newest mobile platform – hey, you’ve just ‘optmized the core’. Then you change your development approach to an agile one, automate everything you can and deliver using DevOps, which should sort out your digital marketing application – and you’re ready to ‘innovate the business’.

Intelligent Platforms

Intelligent Platforms manage the complexity of modern software development and operations. They are built on intelligent automation, context-aware and self-healing capabilities.

Let’s say you’re a financial services company and your business critical application – one of the ones that keeps you ahead of the competition – also doesn’t respond to the needs of the business fast enough. Experience tells you that 40% of the level one support calls you will get this month will be caused by the same two problems that caused 40% of calls last month. Similarly you know that 80% of the level three support calls you will get next month, will be due to the latest release. You know the testing done today, isn’t good enough to catch these things before they go live.

An intelligent platform is built to work with an Agile and DevOps delivery and operating model, but you need the data to drive that model and the smart tools to make sense of the data. You need intelligent monitoring to drive service analytics, feeding cognitive capabilities that ‘learn’ how do deal with those support calls and that can also create better, automated testing scenarios. There’s a few examples of technology providers making investments in intelligent platform …so you don’t have to.

Connected Ecosystems

Connected Ecosystems provide companies with the technical means to securely interface with business partner and customer ecosystems, and with the Internet of Things.

A consumer goods manufacturer already knows about the challenges of sharing data with an extended ecosystem as it optimizes its supply chain. Now take that challenge and add: all the entities you do business with now consume services from different types of cloud (public, private and hybrid) and different providers. Add to that, the increasing number of ‘smart things’ that your own company and the other entities you do business with – which didn’t exist two years ago – now want to use and share data, processes and information.

Connecting this ecosystem just means everyone needs to follow the same standards…simple. I’m joking, obviously. In the real world we need to create an ecosystem strategy. That involves designing IT systems to be interoperable. That probably means a hybrid cloud environment. Definitely an API management layer – that whole cloud brokerage piece. Governance has a big part to play too, for example data covered by privacy laws may need to be processed in-country, whilst pushing none sensitive parts of the same data, to a cost effective public cloud. Progress on this is being made on the hybrid cloud side.

In the next blog post in this series, we’ll look at how liquid applications, intelligent platforms and connected ecosystems help to implement the dual approaches of IT.

For more information in the meantime, check out our Point of View paper below.

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